Sen. Menendez Clarifies Flood Insurance Stance in Op-Ed

Sen. Robert Menendez (D-NJ) penned the following op-ed printed in Friday's Asbury Park Press and provided to Hoboken Patch:

I strongly disagree with the December 16th editorial, “Don’t Stall Flood Insurance Rate Hikes.”

On October 29, 2013, one year to the day after Superstorm Sandy struck, causing billions of dollars in damage and uprooting thousands of families from their homes, I introduced the Homeowner’s Flood Insurance Affordability Act.  My bill is supported by both Democrats and Republicans – not something we see much of lately in Congress.  And support comes from all regions of the country -- from Senator Elizabeth Warren of Massachusetts to Senator John Hoeven of North Dakota. 

My motivation for introducing this bill was the countless Sandy survivors who contacted me, some in tears, pleading for help.  They were facing a triple whammy.  First, they had their home damaged or destroyed by Sandy; then they faced rate increases caused by Biggert-Waters; and finally, to add insult to injury, they will soon face even higher rates as a result of new flood maps coming online.

For many New Jerseyans still trying to get their lives back together, this “perfect storm” of events is simply overwhelming.  It threatens to force victims out of their homes, cause property values to drop, and is a major obstacle to a full and robust recovery from Sandy.  So while it’s true that we must make sure the National Flood Insurance Program (NFIP) is on more stable footing, we need to do so sensibly in order to avoid catastrophic unintended consequences.    

My legislation would require FEMA to take a time-out in order to study and provide solutions to address the effects Biggert-Waters will have on the affordability of flood insurance.  FEMA would have to certify that they are using smart and sound methodologies to update flood maps so we know they’re accurate.  Until these steps are taken, people who bought their home or voluntarily purchased flood insurance after Biggert-Waters was enacted would receive the same treatment as before.  And, homeowners who played by the rules and built to code only to see FEMA move the goalpost with updated maps, would be spared paying thousands of dollars in increased premiums.   

Ensuring accurate Flood Insurance Rate Maps (FIRMs) is critically important because they determine premium costs, and,  with thousands of New Jerseyans incorrectly placed in high-cost V-zones, we know all too well that FEMA’s mapping process is far from perfect.

Just as important as what my bill would do – is what it won’t do.  To minimize the impact on the solvency of the NFIP and reach a consensus, my legislation doesn’t include second homes, businesses, or properties that were substantially damaged or suffered severe repetitive floods. By allowing these policies -- especially the riskiest 1 percent which account for more than one-third of the program’s total costs -- to adjust, we can limit the impact on NFIP solvency. 

Ironically, if not addressed, the drastic rate increases mandated by Biggert-Waters could have the terrible effect of hurting the program’s solvency and costing taxpayers more.  If premiums are increased too quickly, people will have no choice but to drop out of the program.  One study shows that for every 10 percent increase in premiums, participation will drop nearly 3 percent. 

As with any insurance pool, the fewer policies, the more difficult it is to keep the fund solvent, and the more disaster assistance payments the federal government must make, leaving taxpayers on the hook.  Unlike NFIP claims where victims paid premiums into the program and were often forced to comply with strict building code requirements, those receiving disaster assistance had no skin in the game nor were they bound by such requirements. 

Also, let me correct a common misunderstanding: my legislation does NOT encourage new construction in flood prone areas.  The truth is, not only does my bill not subsidize new construction, it doesn’t even subsidize properties that were substantially improved even if they were built 40 years ago. 

Some critics say my bill simply delays the inevitable -- higher premiums. But that’s why my bill not only creates a short-term moratorium, it also requires FEMA to propose long-term solutions to the problem of affordability.  This moratorium will give the victims of Sandy some time to catch their breath and take steps to mitigate against future floods.  One silver lining of Sandy is the additional funds for flood mitigation New Jersey received.  But homeowners and towns haven’t had the time to take advantage of these programs.  For many homeowners, these funds might come too late, as dramatic rate hikes could force people out of their homes.  What a shame it would be if survivors of New Jersey’s worst natural disaster were able to rebuild only to have their dream shattered by a man-made disaster.  They shouldn’t have to be stronger than the storm and FEMA.